The most fundamental fact of life in our world today is change. As a rule‚ people are reluctant to change. We resist it‚ we like to stay within our comfort zone of what is known and accepted by most. THIS IS HUMAN NATURE.
But it's true that what you resist will persist‚ especially when you resist a better method whose time has come. In almost every field of endeavor‚ the arts‚ sciences‚ medicine‚ and business‚ most new ideas have always met with resistance and rejection at first. The more unique and revolutionary the idea‚ the louder and stronger the opposition to it.
People have always been afraid and even ignorant about ideas and methods that may result in change. Fear of change caused ridicule of Christopher Columbus‚ Louis Pasteur‚ Thomas Edison and Albert Einstein. There are other examples of how fear of change had effects on progress.
In the 1800's‚ people bought what they needed at small‚ family owned shops. Then a man named W.T. Grant had an idea that created change. What if we combined all these separate‚ little shops by making them individual departments under one roof‚ in one large store? A new and better way of doing things. Customers loved it.
The individual merchants who owned the old-fashioned retail stores saw their businesses decline. The shopkeepers fought back politically. There were thousands of them with thousands of votes‚ and they lobbied for their right to do things the same old way.
They finally got the local and state governments to outlaw Grant's department stores. Eventually‚ Grant's department store won out. If there is a better way it will persist. In the early 1960's franchising was a revolutionary new technology in business‚ and it was also met with resistance. Newspapers and magazines wrote what a scam and rip-off franchising was. Stories of people who lost their life savings to some franchise were everywhere. There was a strong move to make franchising illegal. In fact‚ franchising actually came within 11 votes of being outlawed by Congress.
Today this so-called scam is responsible for over 34 percent of all retail sales in North America. Franchises sell nearly 800 billion dollars worth of goods and services today. Every industry goes through an evolution similar to this.
Chiropractors were considered quacks in the 1970's‚ the stock market was considered shady and a form of gambling‚ and the first newspaper in British North America‚ The Public Occurrence (1690)‚ was suppressed by the governor of Massachusetts. Now‚ we almost can't do without these industries.
The Pioneers Like all-powerful concepts‚ Network Marketing has also met resistance due to a lack of understanding. There is no mystery to Network Marketing. It's just another form of sales and distribution. Network Marketing is 50 years young. In the early 1940's a company by the name of alifornia Vitamins recognized that all their new sales representatives coming aboard were friends and family of their existing sales force‚ primarily because they wanted the product at wholesale cost. They also discovered that it was easier to create a sales force of a lot of people who each sold a small amount of product than it was to find a few superstars who could sell a lot of products. So they combined those two ideas and designed a sales compensation structure that encouraged their salespeople to invite new representatives from satisfied customers‚ most of whom were family and friends‚ who each had the same right to offer the product and representative status to others‚ which allowed the sales force to grow exponentially. The company rewarded them for the sales produced by their entire group or network of sales representatives. Network Marketing was born! A few years later‚ the company changed its name to NutraLite Food Supplement Corporations.
In 1956‚ NutraLite was joined in Network Marketing by Dr. Forrest Shaklee to gain a broader distribution of the food supplements he had developed.
Not long after‚ in 1959‚ former NutraLite distributors Rich DeVoss and Jay Van Andel started the Amway company as the American Way of marketing products.
Like many truly innovative breakthroughs‚ the development of true network marketing was an accident. Abuses of exponential growth haunted network marketing for years and it is still misunderstood today. One of the first abuses of the concept of exponential growth to generate income may have been the chain letter craze that swept the U.S. after World War I. The letters promised great profit if you would send a dime or a dollar to the person at the bottom.
The chain letters spread as far as Europe‚ and by the 1930's the U.S. post office estimated that 10 million letters were being mailed each day. Postal Authorities and law enforcement agencies battled the fraudulent schemes and the chain letter phenomenon began to subside in the early 1940s. Unfortunately‚ this scam spawned schemes which came to be known as pyramids‚ where money was given for the right to involve others‚ as no valid product which was being purchased from the company.
In 1974‚ Senator Walter Mondale declared such companies to be the nation's number one consumer fraud. Law enforcement agencies moved quickly to clean up the abuses. In the mid 1970's‚ with no clear understanding of what constituted a legitimate use of network marketing‚ the Federal Trade Commission and state agencies across the nation turned their eyes to almost all network marketing companies. In 1975‚ the FTC filed suit against Amway‚ alleging that the company was an illegal pyramid and that its refusal to sell its products in retail stores constituted a restraint of trade.
Amway spent four years and millions of dollars in legal fees to clear its name. In 1979 the FTC (Federal Trade Commission) ruled that Amway was not a pyramid‚ that its revenue was generated from the sale of its products‚ and the FTC acknowledged network marketing as a legal and efficient distribution system.
Network Marketing exploded in the next decade.
How MLM (Network Marketing) got started and grew to meet the needs of the customer and the entrepreneur. It’s fascinating 
A company that creates a product must make that product widely known. Sales organizations made up of individual salespeople were (and still are) the backbone of business.
The number of salespeople in the United States began to grow rapidly starting in the late 1800s.
1861: 1000
1869: 50,000
1885: 100,000
1903: 300,000
1860 - Traveling salesmen were known as canvassers, peddlers, hawkers and drummers. Some of these former peddlers created trained sales organizations. Had it not been for their influence, many of the corporate names we’re all familiar with today might never have been.
-Henry Heinz, a former peddler, created an organization of 400 salesmen to sell various vegetable products, like ketchup and pickles, to people who didn’t grow their own.
-Asa Candler, another former peddler, built a sales force to sell Coca-Cola syrup to restaurants after buying the formula from pharmacist John Pemberton for $2300 in 1886.
Out of these organizations came companies that allowed their salespeople to have their “own” business.
1868 - J.R. Watkins founded the J.R. Watkins Medical Company, one of America’s first natural-remedies companies where associates marketed directly to consumers.
1890 - David McConnel started the California Perfume Company, based out of New York. In 1906 he had 10,000 sales representatives selling 117 different products. The California Perfume Company changed its name to Avon Products in 1937.
1905 - Alfred C. Fuller was another former peddler who greatly influenced future sales organizations. Fuller started the Fuller Brush Company and hired 270 dealers throughout the U.S. to follow his business plan on commission only. By 1919, the Fuller Brush Company had made $1 million in sales; by 1960, $109 million.
1931 - Frank Stanley Beveridge was the former vice president of sales for Fuller Brush Company. He and Catherine L. O’Brien founded Stanley Home Products. Influenced by the economic hardships of the Great Depression, Frank and Catherine envisioned an opportunity for people to start their own businesses with minimal investment, selling products that people use everyday. This vision was obviously taken from the Fuller Brush Company. Stanley Home Products sold household cleaners, brushes, and mops. Some Stanley dealers began giving demonstrations for clubs and organizations rather than for individuals to increase sales volume. Other Stanley dealers quickly embraced this idea as a way to maximize the selling presentation. These dealers took the “clubs and organizations” concept into homes by having the home owner invite friends and family over….and the “party plan” was born.
Stanley Home Products became the training ground for many well-known company leaders. Mary Kay Ash, founder of Mary Kay Cosmetics; Brownie Wise of Tupperware; Jan and Frank Day, founders of Jafra Cosmetics; and Mary Crowley, founder of Home Interiors all received early training as Stanley Home Products dealers - again spurred by the Fuller Brush company.
1934 - Carl Rehnborg started the California Vitamin Corporation selling what today are known as vitamin supplements. In 1939 the company changed its name to Nutrilite Products Company, Inc.
1945 - Nutrilite contracted with Mytinger & Casselberry to become the exclusive American distributor of Nutrilite products. Mytinger & Casselberry created the first documented MLM compensation plan. It worked like this: A Nutrilite distributor bought his supplies at a 35% discount. (Ex: A distributor bought a box of vitamins for $13 and then sold them for $20 = $7.00 profit.)
To encourage the distributor to sell more, Nutrilite paid an extra monthly bonus of 25% on the total sales. 20 customers x $13.00 (wholesale value) = $260 x 25% =$65.00 profit.
Once the distributor proved that he could get 25 customers he was allowed to become a DIRECT distributor - which meant that he could find others who wanted to sell the Nutrilite products and then they would buy their products from him. In essence, once he proved that he could get customers he was “promoted” and allowed to find other distributors and to train them to get customers. As an incentive to train his distributors well, once he and his distributors amassed 150 customers, he received an additional 2% of the total sales volume.
This is not a pyramid - it’s a quota-based system of management. Those who sold the most boxes of vitamins got a higher reward than those who sold little. The MLM compensation plan was simply an extension of the Fuller Brush Company rewarding production. With MLM (Network Marketing) , the company could motivate a sales person to not only sell more products, but to train others to sell more products as well.
1945 - Earl Tupper created a line of flexible, lightweight plastic containers with tight-sealing lids. He started selling his products through conventional retail outlets, but realized the products needed demonstration. Earl Tupper then teamed up with Brownie Wise (formerly with Stanley Home Products) and launched Tupperware Party Plan, now a world-wide billion-dollar company operating in 40 countries.
1949 - Rich DeVos and Jay Van Andel (high school buddies and business partners) returned from military service and became distributors for Nutrilite vitamin supplements in 1950. After a brief dilemma with Nutrilite in 1959, the two abandoned ship and formed the Amway Corporation. In 1972 Amway Corporation acquired Nutrilite.
1956 - Dr. Forrest Shaklee developed a method of extracting minerals from vegetables and used MLM (Network Marketing) to distribute his products.
1963 - Mary Kay Ash creates Mary Kay Cosmetics. By 1996, company sales were in excess of 2 billion dollars.
1975 - The FTC (Federal Trade Commission) filed suit against Amway corporation for operating a pyramid scheme.
1979 - An administrative law judge ruled that Amway’s multi-level-marketing program was a legitimate business opportunity, as opposed to a pyramid scheme.
The MLM Industry was proven a legal form of distributing goods and services by the U.S. Federal Government in 1979.
In addition, the MLM business model has proven itself highly effective at distributing products and services to consumers based on the same benchmarks used by Wall Street.
The Structure of an MLM company is unique to each company. The structure of an MLM company is made up of:
1. Intention of company owners.
2. Product or service they sell.
3. Commission plan.
4. Training provided to distributors.
These four structural parts dictate the activities of the distributors within an MLM company
The Activities of both distributors and owners of the MLM company determine whether that company is operating legally and ethically - just like every other business.
Legal and ethical activities in MLM include selling products to consumers that make their lives better, servicing the customer, and training new distributors so they get results.